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Economic Analysis: Theory and Practice
 

The Free Money Index

Vol. 19, Iss. 8, AUGUST 2020

Received: 21 May 2020

Received in revised form: 10 June 2020

Accepted: 23 June 2020

Available online: 28 August 2020

Subject Heading: INTEGRATED ECONOMIC-SOCIO-ECOLOGICAL ANALYSIS

JEL Classification: A13, D12, E21, I31, O15

Pages: 1512–1530

https://doi.org/10.24891/ea.19.8.1512

Mal'tsev K.V. Regional Analytics & Information, Nizhny Novgorod, Russian Federation
kv@superresearch.ru

ORCID id: not available

Ershov D.E. Raspberry RU, Nizhny Novgorod, Russian Federation
erschow@mail.ru

ORCID id: not available

Subject. The development of modern information technologies determines the emergence of new opportunities for obtaining empirical data on household consumption. This allows the formation of new, alternative indicators characterizing various aspects of the standard of living. The article describes one of these indicators, i.e. the free money index.
Objectives. The purpose is to show the possibilities of the free money index in the analysis of living standards of the population.
Methods. The empirical basis of the study is the data of the Federal State Statistics Service and Romir Consumer Scan Panel.
Results. We calculated the free money index for households in Russia from 2008 to 2019. In general, the index has an upward trend, except 2009 and 2015. It includes cities with different population and takes into account the level of inflation, physical volume of purchases by four selected products, and seasonal fluctuations.
Conclusions. The free money index, differing from the purchasing power, the wealth index and other indicators, characterizes the structure and changes in household consumption, and objectively reflects the well-being of the population. The free money index computation is necessary for the current analysis of economic and social policy measures. In more general terms, it can also be used to study the household behavior in micro- and macroeconomic aspects, the public welfare, and the impact of income distribution on economic development.

Keywords: quality of life, free money index, panel study, household consumption pattern

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